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...Good story, dude. What's the point? That outsourcing will eventually be abandoned because it will fail? Then why are you afraid of it? Guys, if you want to

...Good story, dude. What's the point? That outsourcing will eventually be abandoned because it will fail? Then why are you afraid of it? Guys, if you want to start arguing against outsourcing, you're gonna have to start making economic sense. It's a hard position to take--and very few economists take it--because it is very hard to economically justify protectionism. Right now I'm picturing some hacker sitting in Indonesian-made clothes, typing into his Chinese-made keyboard with ICs from Taiwan (or wherever) angry posts about how globalization is destroying our economy and depriving us of value. Meanwhile, the average wage of the low-class Chinese worker (as an example) rose 17% over the last year. Outsorcing is just globalization continued. And the people who complain about the low quality of outsourced labor remind me of Doc Brown in "Back to the Future", in a scene set in 1955: "No wonder this circuit failed... it was made in Japan..."

gaius 16y ago
OK, in economic terms, I don't think outsourcing as often practiced in services and high tech adequately accounts for externalities. If someone is incentivized - through say a bonus system - to prioritize the short term over the long term then that is what they will do. If this means closing a call centre in the West and opening one overseas, then that might make perfect sense right now. Will it make so much sense when customers go elsewhere? That is what I mean when I say that a race to the bottom ultimately destroys rather than creates wealth. Some of your customers will go elsewhere. Some will simply stop using that product or service altogether. There are already signs this is happening; Nat West (a UK high street bank) are now advertising "only UK call centres". Now, it doesn't matter one little bit that their cheque processing is done in India, that is, to borrow a bit of programming jargon, referentially transparent. That is just one example. So what I am afraid of? I am afraid of being personally inconvenienced by the interests of the organizations I transact with being further misaligned with my own. In other words, it's a tragedy of the commons scenario. So I know it will fail. I just don't see why we have to go through the pain first when there's no need.
- cynicalkane 16y ago
  The existence or nonexistence of outsourcing won't change the fact that people do not always make the optimal economic decisions. The fear of some economic agent making a suboptimal decision is a pretty poor reason to argue against anything, unless there's something intrinsic to the economic good in question that inspires suboptimal decisions (drugs, gambling). In fact, when it comes to drugs, I bet the majority of people people on this website would support legalization of at least some drugs, and allow people to make their own bad decisions. But we're still poisoned with the notion that companies in market economies in general have to be prevented from making sub-optimal decisions. Why? Why do people still think this?
  - gaius 16y ago
    Hey, I'm not calling for protectionist laws or anything. I'm just pointing out that people who outsource are optimizing the wrong thing if their goal is net wealth creation in the long term. And it most likely is; we'll all retire one day. Gambling is an entertainment product; it's no more or less a suboptimal use of money than going to the movies.

gaius 16y ago

OK, in economic terms, I don't think outsourcing as often practiced in services and high tech adequately accounts for externalities. If someone is incentivized - through say a bonus system - to prioritize the short term over the long term then that is what they will do. If this means closing a call centre in the West and opening one overseas, then that might make perfect sense right now. Will it make so much sense when customers go elsewhere? That is what I mean when I say that a race to the bottom ultimately destroys rather than creates wealth. Some of your customers will go elsewhere. Some will simply stop using that product or service altogether. There are already signs this is happening; Nat West (a UK high street bank) are now advertising "only UK call centres". Now, it doesn't matter one little bit that their cheque processing is done in India, that is, to borrow a bit of programming jargon, referentially transparent. That is just one example. So what I am afraid of? I am afraid of being personally inconvenienced by the interests of the organizations I transact with being further misaligned with my own. In other words, it's a tragedy of the commons scenario. So I know it will fail. I just don't see why we have to go through the pain first when there's no need.

cynicalkane 16y ago
The existence or nonexistence of outsourcing won't change the fact that people do not always make the optimal economic decisions. The fear of some economic agent making a suboptimal decision is a pretty poor reason to argue against anything, unless there's something intrinsic to the economic good in question that inspires suboptimal decisions (drugs, gambling). In fact, when it comes to drugs, I bet the majority of people people on this website would support legalization of at least some drugs, and allow people to make their own bad decisions. But we're still poisoned with the notion that companies in market economies in general have to be prevented from making sub-optimal decisions. Why? Why do people still think this?
- gaius 16y ago
  Hey, I'm not calling for protectionist laws or anything. I'm just pointing out that people who outsource are optimizing the wrong thing if their goal is net wealth creation in the long term. And it most likely is; we'll all retire one day. Gambling is an entertainment product; it's no more or less a suboptimal use of money than going to the movies.